Choosing a forex broker in 2021: A few tips

Whether you are a brand new beginner trader or someone with more experience in the industry, there are always points to consider when choosing your broker. But let's go in order.

It should be noted that over the last few weeks the euro-dollar exchange rate has changed profoundly. Thanks to an important series of purchases on the dollar, in fact, the European currency has begun to weaken to the advantage of the "greenback", bringing the price down to 1.19. This, in fact, is an excellent advantage for Europe, which in this way will be able to exploit the weakness of the euro to be able to push exports, helping the economy put to the test by the health emergency.

At this point we will take a closer look at the basic fundamental points you need to consider, alongside some of the newest features and developments of top forex brokers in 2021 to allow you to make the best informed trading choice.

The Basics: 3 things to consider before choosing a forex broker

Every success starts with a strong foundation. The same is true when choosing your forex broker. These are a few of the fundamental points you should consider from the outset:

High security level

A secure trading environment with a trusted broker is an integral starting point to a positive forex trading experience. Here you should be looking to the top-tier bodies in the regulatory world when making your choice.

This means your broker should be regulated by the likes of ESMA and CySEC within the EU, the FCA within the UK, ASIC in Australia, the SEC in the United States, or another established regulator around the world.

Money protection

Alongside top-tier regulatory protection, you will typically find that every broker offers the use of segregated bank accounts for your funds as standard. This ensures your money will always be safe no matter what happens with the brokers own finances and is often mandatory depending on the regulator. 

Not always mandatory though, is negative balance protection. This is widely offered by most brokers though with many of the top names still choosing to offer it in countries where it is not mandatory to do so.

Low costs and fees

It goes without saying you will always want the best value, lowest fee environment you can find without compromising on other features. You will typically find the lowest spreads and some of the fastest execution speeds with an ECN broker where spreads usually start from 0 pips.

Also, you will want to keep an eye on any non-trading fees like deposit and withdrawal fees based, inactivity fees, and the number of base currencies available so you can do your best to avoid any conversion charges.

New trends in broker offerings

Forex brokers are always evolving and adding to the features they offer. Here are a few of the latest features and areas you will want to look out for to sign-up with a cutting-edge broker.

Multi-Asset service

No longer is a forex broker only a forex broker. Choice is everything this year and moving forward. You will now find that the majority of the best forex brokers also offer hundreds, if not thousands of other assets across a variety of markets. 

Much of this has been made possible thanks to CFDs and to a lesser extent other derivative products being harnessed by many. 

Alongside this, many brokers will offer trading in the futures market even on forex currency pairs, options trading, and real stock trading, as well as CFDs. 

Fractional share trading has also seen huge growth in popularity and is offered by several brokers in the sector.

Cryptocurrencies and Wallets

Cryptocurrency is an ever-increasing market segment. As mentioned above, this is a step over from your traditional forex trading where fiat currencies are traded for other fiat currencies. In the age of digital currency though, many brokers have harnessed the opportunity to operate crypto trading in a very similar fashion. 

As well as trading crypto like Bitcoin (BTC) in pairs with major currencies like the USD and others, you can also take advantage of many more crypto-cross markets like BTC/ETH and others. This expands the number of assets you can trade while keeping many of the core forex trading principles intact. 

Some brokers will even offer markets in real crypto and storage through crypto wallets just like any of the major cryptocurrency exchanges. 

Over the course of 2021, the growth of cryptocurrencies was decisive. It is enough to think of the fact that Bitcoin has gone from a value of approximately $ 30,000 on January 1, 2021, to a current value of over $ 50,000. The same goes for the Ethereum which has done even better, almost doubling its value. This denotes a greater attention of people towards cryptocurrencies and a desire to invest in what, to all intents and purposes, can be considered a sector that has now matured.

Hybrid execution methods

Typically you will find your forex broker offering ECN, STP, or Market Maker trade executions. These are most common. However, according to the analysts of InvestinGoal, fewer and fewer forex brokers offer only one execution method to their customers nowadays. In fact, hybrid execution models have continued to emerge and may fit your trading needs ideally.

ECN execution is high-speed and with typically lower spreads, ideal for those scalping, or more experienced. As a casual trader though, the minimum trading requirements can be high with a usual 0.1 lot minimum. On the other hand, market makers might be cheaper in terms of trading sizes, but they may not be perfect if you are looking for the lowest spreads. 

In steps the ECN STP hybrid execution method to hopefully provide the best of both worlds. In a competitive industry, brokers are always trying to find the lowest cost, most efficient way of executing your trades so it is something to keep a regular watch on.

Mobile apps

Mobile trading has never been more important before. Convenience is becoming key in today’s world. This has seen many brokers devote huge time and resources to developing the best mobile apps possible. There are now many mobile compatible trading platforms and broker apps that can rival their desktop counterparts for functionality. 

This is something to look out for when making your choice and ideally, you would like to have a broker that at least provides a mobile app where you can monitor and manage your account without great loss of functionality. 

Smartwatch compatibility is also on the rise with push notifications and even the ability to buy and sell with ultimate mobility. This may not be your go-to trading medium, but perfect to keep an eye on your positions even when you are not in front of your PC.

Social-Copy Trading

Social and copy trading is nothing new. The global environment though has evolved to make it hugely relevant. Nowadays many traders want and seek out opportunities to interact with each other, sharing ideas or following and copying strategies in a number of ways. 

Many top brokers have seen this movement and most are now offering at least some service, or partnership with leading third-party social and copy trading platforms to meet these needs.